There has been a recent agreement by the WTO members regarding the exemptions of the IP rights on Covid-19 vaccines worldwide for 5 years. However, what is the legal basis of that exemption?
The World Trade Organization (WTO) Ministerial Conference has come to a decision on the proposed Trade-Related Aspects of Intellectual Property Rights (TRIPS) waiver for COVID-19 vaccines, therapeutics, and diagnostics.
The waiver will allow the governments of WTO member countries to authorize the manufacturing and distribution of Covid-19 vaccines by vaccine manufacturers within their jurisdiction. The authorization of the governments can be made in the forms of executive orders, emergency decrees, or administrative orders, etc.
However, it should be noted that such authorization of governments can only be made ‘to the extent necessary to address the COVID-19 pandemic.’ This means that without the establishment of a crisis need for Covid-19 vaccines to be mass-produced in a short time, the governments can’t make the authorization.
Even if there is such a dangerous situation, proving that the country is indeed needed to authorize such waiver later to other WTO member countries and more importantly, vaccine patent holders, would be difficult, potentially raising a massive and prolonged legal battle.
Positive impacts of the waiver
According to many studies, low-income countries need to pay up to 10 times the estimated cost of production of a vaccine. This phenomenon happens because the pharmaceutical companies, as well as the country they are established in, own a monopoly on the production and distribution of vaccines.
The citizens of the United States, where most pharmaceutical companies are established, often complain about the price of access to medical health. Therefore, it’s not strange that when such medical drugs are exported to poorer countries, the prices skyrocketed, leaving the people of those countries the ones to suffer the most.
In many instances, the price of the drugs is the factor that kills the life of a patient, not the disease itself.
A waiver of IP rights to Covid-19 vaccines will greatly affect positively the lives of the citizens and their wallets. With the ability to produce and the right to produce vaccines, poor countries that are in short supply of Covid-19 vaccines will have the means to protect the rights of their citizens.
Although it might not be clear anymore, the threat of the Covid-19 disease was real back when it was first introduced to the world in 2019 and 2020 – the period when no vaccines were to be found.
Therefore, not just economically but on the humane side of the problem, the waiver can and will save the lives of the people.
Legal basis to exempt the intellectual property rights
The agreement on trade-related aspects of intellectual property rights (TRIPS Agreement) within the WTO stipulates that countries must protect most of the subjects of intellectual property rights based on the inheritance of previous international treaties such as the Paris Convention on Industrial Property Rights, the Berne Convention, …
The TRIPS Agreement was also very flexible in its terms to allow countries to use intellectual properties without the consent of the owners of intellectual property rights in certain situations, including cases such as the outbreak of a pandemic making people’s life to be dependent on how fast production of a vaccine is.
At the end of 2020, the obligations proposed by India and South Africa including the provisions of part 1 (copyright and relevant rights), part 4 (industrial design), part 5 (patent), and part 7 (Secret information protection) in Part II and the obligation to execute those parts in Part III of the TRIPS Agreement.
According to this proposal, the member countries of the TRIPS Agreement will be able to temporarily suspend the obligations to protect the IP rights globally for products related to Covid-19, including diagnostic kits, medications, vaccines, and medical equipment needed to prevent the spread of Covid-19 pandemic. IP rights are applied in the proposal including copyright, related rights, rights for patents, industrial designs and confidential information.
This issue was discussed at the Trips Council and then the WTO General Assembly. Thereby, the proposal of India and South Africa received many mixed reactions from the WTO members.
As the scope of the exemption is too broad and the fact that the basic idea of the exemption affects the rights of vaccine-created pharmaceutical companies as well as most countries where that companies are based, the exemption by South Africa and India got denied repeatedly by many WTO member countries.
The European Union and the United Kingdom are of the strongest opposers of the waiver, arguing that the IP system has a crucial role in generating innovative vaccines against the Covid-19 virus and providing an incentive for further work to address new variants.
The argument went on for almost 3 years with many countries flipping their opinion such as Australia at the end of 2021.
However, it is not until June 2022 that a compromise deal on patent rights for Covid-19 were agreed upon and passed through.
The TRIPS Agreement sets out the legal basis for waivers. Article IX.3 of that instrument states that ‘in exceptional circumstances, the Ministerial Conference may decide to waive an obligation imposed on a Member by this Agreement or any of the Multilateral Trade Agreements’.
Under Article IX.4, ‘a decision by the Ministerial Conference granting a waiver shall state the exceptional circumstances justifying the decision, the terms, and conditions governing the application of the waiver and the date on which the waiver shall terminate’.
According to the Ministerial Decision on The Trips Agreement adopted on 17 June 2022, the Ministerial Conference, having regard to paragraphs 1, 3, and 4 of Article IX of the Marrakesh Agreement Establishing the World Trade Organization and noting the exceptional circumstances of the COVID-19 pandemic, have issued the following decision:
“Notwithstanding the provision of patent rights under its domestic legislation, an eligible Member (of the WTO) may limit the rights provided for under Article 28.1 of the TRIPS Agreement by authorizing the use of the subject matter of a patent required for the production and supply of COVID-19 vaccines without the consent of the right holder to the extent necessary to address the COVID-19 pandemic, in accordance with the provisions of Article 31 of the Agreement.
For greater clarity, an eligible Member may authorize the use of the subject matter of a patent under Article 31 without the right holder’s consent through any instrument available in the law of the Member such as executive orders, emergency decrees, government use authorizations, and judicial or administrative orders, whether or not a Member has a compulsory license regime in place.
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An eligible Member need not require the proposed user of the subject matter of a patent to make efforts to obtain authorization from the right holder as set out in Article 31(b).
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An eligible Member may apply the provisions of this Decision until 5 years from the date of this Decision. The General Council may extend such a period taking into consideration the exceptional circumstances of the COVID-19 pandemic. The General Council will review annually the operation of this Decision.”
This decision gained consensus among WTO members, including EU and UK.
The proposal is narrower than the original, as it does not currently cover diagnostics and therapeutics.
For the next five years, developing nations will be permitted to utilize proprietary materials and ingredients in the production of Covid-19 vaccines for domestic and qualifying markets without the approval of the rights holder. The owners of the rights will be reimbursed to protect their legitimate rights.
The opinions of the public are mixed. Some organizations have complained that this is insufficient, and some governments have requested for it to be expanded to include more relevant technology. On the contrary, some pharmaceutical companies claim that this will stifle innovation.
Negative responses to the decision
Thomas Cueni, International Federation of Pharmaceutical Manufacturers & Associations (IFPMA) Director-General, stated: “The conversations on an intellectual property waiver have been challenging from the beginning, with disregard to evidence and facts. The decision is a disservice to the scientists that left no stone unturned and undermines manufacturing partnerships on every continent. The single biggest factor affecting vaccine scarcity is not intellectual property, but trade. This has not been fully addressed by the World Trade Organization”.
“The IP framework has provided the basis for more than 380 voluntary partnerships for COVID-19 vaccines to be set up in record time, 88 percent of which involve technology transfer,” wrote the Federation. “Today’s decision sends a dangerous signal not only to the pharmaceutical industry but to all innovative sectors. Dismantling the very framework that has brought solutions to tackle COVID-19 and facilitated the unprecedented number of partnerships, voluntary licensing and knowledge-sharing taking place during this pandemic can have ripple effects for the future.”
Besides the impact of the nature of the decision, there is still one big issue that many opposers have stated over the years – the right to produce is not important as the capability to produce.
This statement is addressed to the fact that most countries that don’t have access to Covid-19 vaccines at this time and age, don’t have the means to produce them either. Not just poor countries but most developing countries have the same situation.
Vaccine production requires the availability of vaccine components (raw material), production facilities, training of people, and enactment of suitable legislation.
The latter requirement may be resolved with the issuance of the decision but the raw materials needed to produce vaccines as well as the facilities, and knowledge to produce the vaccines which are exclusively owned by pharmaceutical companies, can’t be obtained that easily.
The know-how to produce the vaccines can only be shared by patent holders, many of whom are not happy with the decision by the WTO.
For the waiver to be useful, patent holders must agree to share their know-how and transfer the relevant technology. If that is not the case, the decision on the exemption of the Covid-19 vaccines, in many expert’s opinions, are nothing but an empty gesture without practical usefulness.
You can see the list of International IP Firms here.